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Funding Dynamics

July/August 2015

By Bob Shea and Jacalyn A. Askin

Public misconceptions and financial realities come together to propel the need to change the economic models of higher education.


Is higher education, as an industry, required to deliver immediate return on tuition payer and taxpayer investment, or is the value of an education delivered over the entirety of one’s lifetime or over multiple generations of family history? That’s a question that The New York Times columnist Frank Bruni raises in a Feb. 11, 2015, opinion piece, “College’s Priceless Value,” in which he eloquently describes the challenges facing higher education. 

Bruni adds nuanced reason to the current debate raging about the value and utility of education in an era defined by resource scarcity. He writes, “And it’s dangerous to forget that in a democracy, college isn’t just about making better engineers but about making better citizens, ones whose eyes have been opened to the sweep of history and the spectrum of civilizations.” Thus, he asserts, higher education has to deliver on the wide ranging societal expectations that we produce not only capable engineers, scientists, doctors, and social workers ready to move into the workforce, but also educated citizens ready to take on the significant economic, cultural, and societal issues we face as a nation.

Seismic Shifts in Higher Education Funding Sources

Bruni is one of the many voices expressing the view that a college education’s purpose is to go beyond the practical to provide a lifetime of value to students and our society. However, in recent years, this broad vision of education’s role has seemingly taken a back seat to the notion that the primary value of a college education is to land a good job and realize the economic benefits attached to higher levels of education.

While the public discourse and related perception (and skepticism) about the value of higher education have been shifting, the costs of providing that education continue to rise, with the burden of paying the bill increasingly shifting to individual students and families. Existing cost structures, coupled with increasingly constrained public resources to support higher education, have led many to the conclusion that the underlying economic models used by most colleges and universities may not be sustainable in the decades that lie ahead.

Persuasive Messaging, Sustainable Finances

In reflecting on NACUBO’s strategic priorities relative to these critical issues, the board of directors agreed that two initiatives were of paramount importance. First, that NACUBO speaks more clearly and forcefully about the broad value of higher education—both to students and society—as well as about the value of our institutions in their respective communities. Second, that NACUBO provides resources to its members, to guide them through the complex and difficult task of assessing their respective institution’s economic model and considering changes that could place the institution on a stronger and longer lasting financial foundation.

Ways to build value and awareness. To address this first challenge, the board embarked on (1) an effort to identify the most effective messages to reinforce the overarching value of a higher education, and of a college or university to its community; and (2) a strategy for the association and its members to use these messages in their own efforts to convince constituents of higher education’s value and ongoing benefits. This project is expected to be completed later this summer.

Strategy to increase economic stability. The second initiative—finding ways to help individual colleges and universities assess and strengthen their long-term economic health—gave rise to NACUBO’s Economic Models Project.  

Like any large-scale planning process, analyzing and making major adjustments to institutional processes and strategies require that important questions be asked and answered. For the Economic Models Project, the four questions are:

Using these questions as a guide, this multiyear effort will study the current state of higher education economic models and how they have evolved to where they are today. Throughout the various stages of the project, NACUBO staff will be working closely with member institutions and various other stakeholders. Based on the responses to the questions and other data, the project will develop resources to facilitate a data-driven analysis of an institution’s existing economic model and possible changes to that model. 

In the final phase of the project, NACUBO will develop a toolkit for campus discussions about economic model change. Our goal is to design documents that boards, presidents, and their leadership teams can use to walk their institutions through the difficult structural and cultural challenges and innovations needed to propel campuses toward long-term financial sustainability. Focused on implementation, these documents will not offer a prescriptive solution. Our intent is to make them a valuable leadership and management resource that will help individual colleges and universities develop solutions that address the unique needs of their institutions.

In the article that follows, four university presidents, who serve on the Economic Models Project advisory committee, provide perspective on strategies for approaching higher education’s challenges: self-investment in a candid look at issues and solutions; the importance of creating a culture that is passionate for educational achievement; adding entrepreneurship to the ways and means of academics; and the need for cost containment that does not sacrifice quality. 

Also, in a collection of essays, two members, who also are part of the committee, describe the enduring power of the college degree; and the trends that will continue to challenge higher education. A faculty member discusses the importance of faculty support in sustaining the institution.

As is evident in the articles, taking the initiative to re-examine long-standing economic models will require strong leadership as well as compelling communications to our stakeholders. However, with this inspiration and knowledge, campus communities—empowered with data and a shared commitment to strengthen their institutions—can be our best hope of preserving these engines of the American economy, our society, and an interconnected world.

BOB SHEA is senior fellow, finance and campus management, NACUBO. JACALYN A. ASKIN is higher education economic models project manager.


SECTION I: ECONOMICS IN MOTION

Presidential Perspectives

Essay: The Power of a College Degree

Essay: It’s Not Us Versus Them

Essay: Three Trends That Will Challenge Colleges


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